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News Now

CU System
New Brunswick report outlines causes of 40M bailout
NEW BRUNSWICK, Canada (1/21/10)--The near collapse of Caisse Populaire de Shippagan--a Canadian credit union--was due to a string of failures, ranging from shoddy accounting to mismanagement and the government’s failure to ensure adequate supervision of a credit union, according to an investigation by New Brunswick’s auditor general. In 2007, a series of events culminated in requiring a $40 million bailout by the Liberal government in power at the time (www.680news.com Jan. 19). Mike Ferguson issued a 54-page report Tuesday that identified failures in the credit union’s chain of command--and the New Brunswick province’s regulatory regime that allowed the credit union to fudge its financial data, and inflate the salaries of some senior management. However, the report also indicates some of the blame should accrue to New Brunswick’s former Conservative government for failing to ensure adequate regulation and supervision of the credit union. Among the short-comings the report found: there was only a part-time superintendent of credit unions who had been directed to focus on other priorities; and the New Brunswick Credit Union Stabilization Board--the regulatory board at the time--had inadequate powers to act, once it became aware of the of the credit union’s problems. If the government had taken action more quickly, “the total loss to New Brunswick taxpayers would probably have been about half what it eventually was,” Ferguson wrote.


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